Investing can be one of the best ways to outrun rising costs and build lasting wealth. <\/p>\n\n\n\n
If you want to invest and grow your money over the long term, this article covers the essentials of investing and how to get started with confidence.<\/p>\n\n\n\n
See how Quicken helps you plan and track your investments. Investing is the process of buying assets \u2014 like stocks, bonds, or funds \u2014 that grow in value and\/or provide income. The goal is to build and preserve your wealth to meet your financial goals. (More on those below!) <\/p>\n\n\n\n Let\u2019s explore a few ways to achieve your money dreams. For instance, you might:<\/p>\n\n\n\n Note that investing differs from stashing cash in a savings account \u2014 most notably in the amount of risk you take. Compared to savings accounts, most investments run a much higher risk of loss, especially in the short run.<\/p>\n\n\n\n Higher-performing investment portfolios generally require a higher level of risk-taking. But just because you take on more risk doesn\u2019t guarantee you\u2019ll make more money \u2014 in fact, there\u2019s a real chance you\u2019ll lose more. <\/p>\n\n\n\n After all, investment conditions change. Just because a stock was performing well yesterday (or last year) doesn\u2019t mean it will perform well today (or this year).<\/p>\n\n\n\n However, with careful research and preparation, you can craft a plan to navigate the twists and turns.<\/p>\n\n\n\n If you\u2019re not sure how to get started, break down investing into smaller, more manageable steps. Tackling one piece at a time makes the journey more approachable.<\/p>\n\n\n\n In fact, you can start building wealth in just five simple steps:<\/p>\n\n\n\n Once you\u2019ve learned each step, you can \u201crinse and repeat\u201d for every goal and account you need. <\/p>\n\n\n\n Let\u2019s examine each one in more detail. <\/p>\n\n\n\n Before getting in your car, you have at least an idea of where you\u2019re going, right? <\/p>\n\n\n\n That same principle applies to investing. Before putting your dollars to work, you should know where you\u2019re going. Setting investment goals helps guide your way and outline your purpose. <\/p>\n\n\n\n You can divide your investment goals into:<\/p>\n\n\n\n Your current financial situation and each of your financial goals will impact your investing timeline and ideal investment accounts.<\/p>\n\n\n\n For instance, using a tax-advantaged retirement account like a 401(k) can defer taxes and give your investments a better chance to grow. But short-term dollars are usually better off in safer, low-risk accounts and investments \u2014 especially because there\u2019s a penalty for withdrawing funds from your 401(k) early.<\/p>\n\n\n\n If you haven\u2019t started investing for retirement yet, Quicken\u2019s retirement calculator<\/a> can simplify your math. Just plug in your numbers and we\u2019ll help you set realistic, achievable goals.<\/p>\n\n\n\n After determining your goals, your next step is opening an investment account that can help meet those goals. There are two main types of investment accounts \u2014 brokerage accounts and retirement accounts. Let\u2019s take a look at them both.<\/p>\n\n\n\n Brokerage accounts are your \u201cregular\u201d investment accounts. They provide plenty of flexibility in when, where, and how much you invest and withdraw.<\/p>\n\n\n\n If you want to build wealth, invest in non-retirement goals, and take control of your asset strategy, a standard brokerage account usually fits the bill.<\/p>\n\n\n\n Retirement accounts, like employer-sponsored 401(k)s or individual retirement accounts (IRAs), have more restrictions than brokerage accounts. They set rules and limits on contributions and withdrawals. 401(k)s also offer a limited set of investment products.<\/p>\n\n\n\n However, these accounts offer attractive tax advantages to help you save for retirement. For instance, you can usually choose between traditional or Roth accounts<\/a>, which impacts when you pay taxes.<\/p>\n\n\n\n Employers also typically match your 401(k) contributions up to a certain percentage to encourage retirement savings. It\u2019s as close to free money as you can get!<\/p>\n\n\n\n If you\u2019re looking for an employer-matching contribution or want to enjoy a tax break on your savings, retirement accounts make a lot of sense.<\/p>\n\n\n\n Your investment strategy provides your roadmap to investing. Simply put, your strategy describes which assets you invest in, how much you contribute, and when. <\/p>\n\n\n\n Your strategy also factors in your current financial situation and includes your preferences, your savings goals, your age, and even your comfort level in terms of risk. <\/p>\n\n\n\n Because everyone invests for different reasons, your exact roadmap will be unique to you. But most strategies pull from some combination of these common investment strategies:<\/p>\n\n\n\n Learn more about popular investment strategies here<\/a>.\u00a0<\/p>\n\n\n\n See how Quicken helps you plan your investment strategy. Portfolio diversification is the investment equivalent of not<\/em> putting your eggs in one basket. By spreading your dollars across many different investments, you can manage and minimize certain kinds of risk. <\/p>\n\n\n\n Let\u2019s look at an example \u2014 if you only invest in stocks, your portfolio could take a hit when the stock market plunges. But if you own a combination of stocks and bonds, which often move in opposite directions, your bond holdings may prop up your portfolio when stocks decline. <\/p>\n\n\n\n And that\u2019s just the beginning. As you gain more experience as an investor, you might start to diversify across many factors, such as:<\/p>\n\n\n\n Ideally, you\u2019ll want to diversify in several ways, like buying stocks from different industries, sizes, and geographies. Portfolio diversification<\/a> acts like your financial safety net, balancing out the highs and lows to keep your portfolio on track.<\/p>\n\n\n\n Your risk tolerance describes how much investment risk you\u2019re willing and able to take. Tolerance levels range from very conservative to very aggressive, with different assets for different levels.<\/p>\n\n\n\n On your investment journey, here are the key elements that affect your risk tolerance:<\/p>\n\n\n\n Remember, investment risk and asset return are often linked. In general, the more risk you take, the faster your money may grow \u2014 if you don\u2019t lose it! Conversely, taking less risk may mean that your portfolio grows more slowly, but it\u2019s less likely to swing wildly in value.<\/p>\n\n\n\n It\u2019s all about balance \u2014 you\u2019ll need to take enough risk for your portfolio to be able to reach your goals, but not so much that you\u2019re risking more than you can afford to lose. This is where diversification comes in handy! <\/p>\n\n\n\n Finding your perfect risk tolerance as a beginner can be tricky, so we have a guide for that, too<\/a>.<\/p>\n\n\n\n Every seasoned investor once started exactly where you are today, and every investment journey begins with the basics. <\/p>\n\n\n\n To get started, identify your goals, determine your strategy, and adjust for your risk tolerance. Start small, keep learning, and experiment with amounts you can afford to lose as you build confidence and experience on the road to long-term success.\u00a0<\/p>\n\n\n\n
\n Continue \u2192<\/a><\/p>\n<\/div>\n\n\n\n\nWhat is investing?<\/h2>\n\n\n\n
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How to start investing in 5 steps<\/h2>\n\n\n\n
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1. Choose an investment goal<\/h2>\n\n\n\n
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2. Open an investment account<\/h2>\n\n\n\n
Brokerage accounts<\/h3>\n\n\n\n
Retirement accounts<\/h3>\n\n\n\n
3. Plan your investment strategy<\/h2>\n\n\n\n
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\n Continue \u2192<\/a><\/p>\n<\/div>\n\n\n\n\n4. Diversify your portfolio<\/h2>\n\n\n\n
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5. Adapt for your risk tolerance<\/h2>\n\n\n\n
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The big takeaways<\/h2>\n\n\n\n